Part 2 Coal-fired power stations in Africa: when policies and practicalities don’t stack up – Energy usage in Africa

In a three part series, we discuss the practicalities and policy surrounding the use of coal-fired power stations in Africa. In the first post, we explored the changing landscape of coal-fired power. In this Part 2, we consider power demand in Africa.

Africa makes up 13 per cent of the world’s population, but only 4 per cent of its electricity demand. As it stands, only 42 per cent of the African population has access to electricity, compared with 75 per cent in the developed world. Excluding Cameroon, Côte d’Ivoire, Gabon, Ghana, Namibia, Senegal and South Africa, the average grid access rate in sub-Saharan Africa is approximately 20 per cent. Average electricity consumption in sub-Saharan Africa, excluding South Africa, is only about 150 kilowatt-hours per capita.

It is projected that by 2040, 1 billion people in sub-Saharan Africa will gain access to electricity. The African Development Bank estimates the economic cost of the lack of energy, measured as the cost of running backup generation and the foregone production from power outages, at 1 to 4 per cent of GDP in African countries.

Making reliable and affordable energy widely available is critical to the development of the region. Thermal power generation comprises 82 per cent of Africa’s current energy mix. Notwithstanding the conclusion of the Paris Agreement that followed the COP21 Conference in 2015, the coal-fired power plant pipeline is gathering momentum, with the following projects due to take place in the near future:

Country

Pipeline

Botswana

Sese JV – 300MW power generation

Mmamabula West – 600MW power generation

Mmamantswe – 2,000MW power generation

Ghana

The Volta River Authority aims to start construction of a 2x350MW supercritical coal-fired power plant in the coastal town of Aboano in April 2017

Mozambique

Electricidade de Moçambique and other investors are aiming to develop roughly 930MW of new coal-fired capacity

South Africa

South Africa recently brought forward its procurement plans for 3,750MW of cross-border coal power projects to “as soon as reasonably possible”, having originally earmarked procurement between 2025 and 2030

Tanzania

The AfDB has recently outlined plans to invest in the Tanzanian energy sector, including funding the construction of a $563m 100MW geothermal development project

In Part 3 we consider the regulatory landscape surrounding the development of coal-fired power stations in Africa.

Inside Africa would like to thank Tim Baines, Of Counsel and Benjamin Carrozzi, Associate, for their contribution to this blog post.

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Africa is as dynamic a market as it is diverse. We understand that changes impacting your business can arise rapidly and vary significantly across the continent.

Our understanding of Africa’s markets stems from extensive experience on the ground. Through our Inside Africa blog, we aim to apply this insight to provide you with timely commentary on the latest developments across Africa, as well as insight into the many nations that make up this vast continent.